Chapter 1 Introduction
1.2 Research Features
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thinking and choices (Von Neumann & Morgenstern, 2007).
As we mention, although, that emotion has long been recognized in the literature with moderate research progresses, this research differ from existing studies in four aspects and we will illustrate our contributions more specifically in the following：
Emotions were endogenously generated
Focus on both proposers and responders in ultimatum game
Two different mediums in ultimatum game
Artificial emotions
1.2 Research Features
Emotions were endogenously generated
Importantly, Bandelj (2009) argues that current literature recognizes the importance of emotions but unexamined the roles of emotions in economic interaction between actors.
She proposes a different perspective which focuses on emotional embeddedness and examines how emotions matter in economic interactions. Emotional embeddedness research concerns with a premise that emotions result from and are influenced by interactions between economic actors during the economic process. Following this line of inquiry, we start to pay attention to emotion embeddedness in decision making process. In our experiment environment, we do not apply an external device to arouse subjects’
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emotions, and if later on emotions do begin to play a role, it should be endogenously generated.
Focus on both proposers and responders in ultimatum game
Usually, decision making problems could be viewed as choices among alternatives, and the traditional economic theories have told us that the rational subject should be free from the paradox of choice (Schwartz, 2004). However, empirical studies have provided evidences for human’s boundary-rationality and decision conflict during interpersonal situations in which emotional functions of humans can violate economical rationality (Muramatsu & Hanoch, 2005). We consider ultimatum game (Güth et al., 1982) to implement the decision-making environment and to retrieve the embeddedness emotion.
The ultimatum game has been frequently, may be the most, used as an economic laboratorial environment to study the significance of emotions in economic decision making. Basically, two players are required to join ultimatum game. One player announces a sharing proposal, and the other one must chose to accept or reject an offer of a monetary division with the game partner. Although players may consider both strategic aspects and equity aspects of the situation, as pointed out by Camerer (2003), whether to accept an ultimatum offer requires no strategic thinking since it is simply a choice. Hence, player’s emotions rather than game-theoretic reasoning seem to be the culprit responsible for the failure of the prediction.
We notice that there also exists a pile of literature addressing emotional arousal through emotional embeddedness in ultimatum game. Pillutla and Murnighan (1996) studied how the feeling of unfair offers can be attenuated or alleviated through
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information availability. Xiao and Houser (2005) considered the relationship between emotion releasing and communication channels. However, most of these studies (Bosman et al., 2001; Knight, 2012; Ma et al., 2012) focus on the perspective of responders and, mainly, the topics along with responders’ reactions to unfair offers. Our research not only target on responders, we try to contribute a deep look at the role of emotions in proposers’
decisions.
Two different mediums in ultimatum game
In this vein, if emotions do play a role in the ultimatum game, then it is interesting to know whether the medium of exchange can actually trigger or induce emotions differently and, as a consequence, lead to different bargaining behavior. This is one of the main research questions of this paper. Bowles et al. (1997) hinted us:
Economic theory typically assumes that behavioral responses should be independent of the medium of exchange. It shouldn’t matter very much whether players in an ultimatum game are dividing a pot of ten dollars or ten candy bars that can be exchanged for a dollar each.
Daily experience, however, contrasts with this assumption….. To test the importance of the medium of exchange in influencing ultimatum behavior, the game can be played with different mediums, including cash, food, service time and symbolic items (p. 440)
Although it is quite intuitive to see how people will do in decision making when facing multiple choices, past researches were seldom designed for this aim in the ultimate game. In fact, only some earlier studies using non-money mediums and have shown this
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possibility. For example, in their study of the children behavior in ultimatum games, Murnighan and Saxon (1998) found:
The fact that our respondents tended to accept offers of one M&M more often than offers of one penny suggests that respondents evaluated them quite differently. Their emotional reactions when the game switched to M&Ms were quite clear: they were much more physically active and smiled more when they knew that the currency had changed to M&Ms. Thus, future research might investigate whether immediately disposable, attractive commodities like M&Ms lead people to act as if anything is clearly better than nothing. (p. 440)
Also, in their ultimatum games involving smokers, Takahashi (2007) also find that smokers avoided inequity in the ultimatum game more dramatically for money than for cigarettes.
With these initial evidence, this research attempts to address whether money and chocolate will trigger emotions observably differently. Roughly, both money and chocolate are people favorite items, but there exists the difference between monetary and non-monetary. We already learned that informal non-monetary sanctions, comparing to monetary sanction, may lose effectiveness over time (Masclet et al., 2003; Noussair &
Tucker, 2005). However, it is just the beginning that economists are trying to understand the reasons non-monetary affect economic outcomes. Comparing subjects’ behavior under money and chocolate would help us to find out the relationship and influence of monetary and non-monetary mediums.
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Artificial emotions
Finally, the way which we study emotions or measure emotions is different from the usual psychological or neuropsychological approach employed in this research area, exemplified by Sanfey et al. (2003), a pioneering study in this field. We do not offer any psychological or neurobiological measure of emotions, neither by skin conductance responses nor by fMRI (functional magnetic resonance imaging). The way which we approach the issue is inspired from a separate literature on artificial agents(Chen, 2012).
Different from other emotion research in ultimatum game, in this article, we make the first attempt to propose a model of the artificial emotional agent to examine the empirical relevance of the emotional behavioral model using data from the ultimatum game experiments. The artificial-agent approach allows us to hypothesize each kind of possible interaction between the proposer and the respondent that may be emotionally cueing. We build our artificial agents with two possible emotionally cueing mechanisms: one is called the nay-based emotion and the other is called the reference-based emotion. Both emotions can be quantified with different behavioral parameters. Using Monte Carlo simulation, we are able to examine how strongly these two emotions can affect responder’s decision on accepting or rejecting the offer. The artificial agent approach is applied to a fine analysis by taking into account the exchange media, i.e., money and chocolate, as well as gender.
Hence, not only can we examine generally the significance of emotions in decision making, but also can have a fine look at the difference caused by the exchange medium and gender.
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